Hong Kong’s AML/CTF supervisors
The Hong Kong Monetary Authority (HKMA) oversees regulating the financial system and serving as the territory's primary Anti-Money Laundering and Counter-Financing of Terrorism (AML/CTF) regulator. HKMA imposes the following obligations on financial institutions (which include licenced money service operators, authorised insurance brokers, and appointed insurance agents, among others) through the enforcement of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) and the Banking Ordinance (BO).
How do you comply with AML/CTF regulations in Hong Kong?
Customer due diligence (CDD): This must be carried out to ascertain or validate the customer's identity, business type, and beneficial owners. When a customer is suspected of engaging in questionable behaviour, an institution should conduct CDD at the start of the business relationship, before completing any significant transaction (at least HKD 8,000 for wire transfers and HKD 120,000 for all other transactions), and whenever a large transaction is anticipated. The HKMA advises institutions to use varying degrees of CDD rigour in accordance with the risk profile of each consumer. Its policy outlines streamlined due diligence for clients who pose higher risk.
Transaction Monitoring: Institutions must have a system in place to keep an eye out for unusual patterns in transfers and questionable transactions, such as transfers to high-risk offshore jurisdictions. A suspicious transaction report (STR) must be submitted to the Joint Financial Intelligence Unit by an institution if it has reason to believe that a customer is participating in actions that could be in violation of the AMLO. The penalty for failing to report an offence is HKD 50,000 in fines and 3 months in jail.
Record-keeping: CDD data, transaction records, and other pertinent information must be preserved for 5 years following the conclusion of a client relationship. The maximum penalty for violating the AMLO is typically HKD 1 million in fines and 2 years in prison.